December 03, 2007

The Consensus After the Consensus

Now that it's fashionable to bad-mouth the "Washington Consensus" that prevailed throughout the '90s, there's the question of what's going to replace it. Walden Bello, who's pretty far left on these matters, argues that there's no longer any consensus in development circles on how to promote growth and reduce poverty in the Third World—instead there are roughly four distinct schools of thought. Those are:

1. Washington Consensus Plus. Basically, these are the same old market reforms that have been promoted by the IMF and World Bank all these years, only with an extra side helping of institutional and legal reforms. So, for example, the IMF now argues that countries need to develop "financial infrastructure" before they start liberalizing their capital inflows.

2. Neoconservative Neoliberalism. This is the murkiest category, but Bello calls this "essentially the development policy of the Bush administration." This approach mainly seems to involve bilateral debt relief and short-term grants that are conditional on certain free-market reforms. The Millennium Challenge Account is the most obvious example.

3. Neostructuralism. This appears to be the direction countries like Brazil and Chile are heading, in which economic growth and progressive policies are supposed to go hand in hand. So you have market reforms and liberalization, but also income transfers and spending on health, education, and housing to ease the pain—without going too far left, ala Hugo Chavez. "Neostructuralism," says Bello, "does not fundamentally reverse but simply mitigates the poverty and inequality-creating core neoliberal policies."

4. Global Social Democracy. This is the approach that people like Jeffrey Sachs and Joseph Stiglitz now seem to favor, which, Bello argues, often "places equity above growth." Advocates of this view are skeptical of trade liberalization and frequently "demand fundamental changes in the institutions and rules of global governance such as the IMF, WTO, and the Trade Related Intellectual Property Rights Agreements."

Now, I would've guessed that station #4 was the leftmost stop on this train, but, no, Bello argues, the problem with that view is that "global social democracy" is just plain incompatible with the "rapid integration of markets and production." Or at least it might be. He doesn't really offer any evidence on this score.

Then Bello really gets the neo-Marxist party started and suggests that "a functionally integrated global economy" is probably undesirable and, in any case, only came about as a "desperate and unsuccessful effort to overcome the crises of overaccumulation, overproduction, and stagnation that have overtaken the central capitalist economist since the mid-seventies." Well, no thanks, I'll stick with Door #4 (I think), although his broader taxonomy seemed useful enough.